Virginie Chesnais serves as chief marketing officer at the ad‑technology analytics firm Happydemics. For many years, gamers have viewed in‑game advertising with suspicion, and that wariness is not unfounded. The reputation of gaming ads is mixed: players often encounter redirects to unrelated sites or apps, misleading creative, and dismissible close buttons that are difficult to locate, all of which generate frustration.
A recent study by eMarketer revealed that 52 % of respondents would abandon a game if they ran into multiple intrusive ad elements. Losing half of an audience at the moment you are trying to engage them is hardly an effective tactic.
Nevertheless, advertisements do not have to be a negative experience. The same research indicated that one in five gamers would actually increase the frequency with which they play a title if the in‑game ads were of a high quality and felt relevant. This suggests that, when executed correctly, advertising can enhance rather than detract from the gaming experience. Xbox is currently piloting an ad‑supported streaming service for games, and the overall cost of gaming continues to climb.
In this environment, well‑crafted ads could find a receptive home within the medium. The argument for introducing a modest advertising model into gaming is more compelling than many assume, especially when we look at the success of linear media platforms.
Services such as Netflix, Disney+, and other streaming giants have demonstrated that a tiered approach—offering both ad‑free and ad‑supported options—can generate substantial revenue while expanding the audience base. If Xbox’s experiment proves viable, it could not only preserve its subscription base but also unlock a fresh, previously untapped source of income at a moment when the company is eager for additional cash flow. This development matters because console gaming is increasingly positioned as a premium product.
Prices for games, consoles, accessories, and downloadable content have risen steadily, creating a financial hurdle for the average player. Xbox itself has stated that, when handled responsibly, advertising can lower the barrier to entry and make gaming more affordable. We have already observed this dynamic in the mobile sector, where ad‑supported tiers allow players to access games without paying large upfront fees.
The model works because it offers a free or low‑cost entry point while still delivering value to advertisers through a captive audience. Importantly, the approach remains optional.
Players who prefer an uninterrupted experience can continue to pay a subscription fee to avoid ads. By providing a two‑tier system—ad‑supported and ad‑free—Xbox aims to keep its core fan base satisfied while simultaneously attracting newcomers who might otherwise be priced out.
Although no specific survey data on Xbox’s new service has been released yet, it is reasonable to assume that a large majority of gamers would tolerate a short, 30‑second commercial if it granted them an hour of gameplay in a beloved or new title. Xbox’s internal data likely supports this hypothesis. Happydemics has analyzed 285 in‑game advertising campaigns across the United Kingdom and North America, finding that gaming ads consistently outperform television, social media, and other online formats in terms of recall and attribution. In other words, players are more likely to remember a brand they saw within a game and correctly associate the ad with that brand.
Xbox’s “around‑the‑game” strategy—showing ads before the gameplay begins rather than embedding them within the game world—adds another layer of advantage. Our research indicates that pre‑game placements generate higher recall and attribution scores compared with ads that appear directly inside the game environment.
This distinction is crucial because, while we may notice advertisements on TV or scrolling feeds, we do not always link those impressions to the correct brand. Gaming appears to occupy a unique space where ad recall and brand association are markedly stronger, which explains why companies like Xbox and EA are increasingly exploring ad‑based revenue models.
It is also essential to clarify that Xbox’s ads will be pre‑game, not in‑game. Traditional in‑game formats tend to excel further down the conversion funnel, delivering stronger lifts in brand image, consideration, interest, and overall likability.
A hybrid approach—combining pre‑game and in‑game ads—could theoretically deliver the best of both worlds for advertisers, though it might also provoke greater resistance from players who value an uninterrupted experience. Xbox has pledged that its advertisements will not be intrusive. By placing ads before the game starts, the company aims to preserve the immersive nature of the gameplay itself. This is a win‑win: players enjoy an ad‑free session once the game launches, and advertisers benefit from a captive audience that is primed to receive the message without feeling disrupted.
Relevance will be another key factor. Nobody wants to see an advertisement for cat food when they don’t own a cat, or a promotion for a game they have already completed. By delivering contextually appropriate ads—perhaps based on a player’s interests, previous purchases, or geographic location—Xbox can keep the experience pleasant and increase the likelihood that users will remain engaged rather than exit at the first sign of an irrelevant commercial.
Nevertheless, Xbox is venturing into largely uncharted territory. The first unknown is how gamers will react to a regular stream of pre‑game ads; the second is whether the revenue generated will be sufficient to sustain the model over the long term. The decision to explore ad‑supported game streaming reflects a bold, risk‑taking mindset from Xbox CEO Asha Sharma, who has demonstrated a willingness to experiment with new business models. Whether this gamble will pay off remains to be seen.
Historically, many of our gaming‑ad projects have revolved around “watch an ad, earn an extra life” mechanics, where the ad provides a tangible in‑game reward. Xbox’s proposition differs: players would watch an ad to access a game they already own, without any additional in‑game benefit.
Our existing data set does not yet reveal how this model will be received. However, broader research on ad format perception shows that descriptors such as “non‑intrusive” and “immersive” consistently rank among the most positively received attributes.
If Xbox—and potentially other platforms in the future—aim to make gaming ads a success, these two qualities will need to be carefully monitored and optimized. My forecast is that Xbox will neither be the first nor the last major publisher to trial this approach. Advertising has been part of the gaming ecosystem for years, but it has often been implemented without the player’s experience as the primary focus.
Should Xbox manage to strike the right balance, it could pave the way for other companies to adopt similar models, ultimately making video games more accessible and affordable for everyday gamers.